Main Street hoping for more traction beyond tax cuts

Main Street helped Donald Trump to a win in November 2016, feeding on his message of less regulation, coupled with overhauls to both the tax code and the Affordable Care Act. These pillars of Trump's campaign and his first year in office — with expectations for action on key issues like tax reform — have sent optimism on Main Street soaring, alongside the stock market's record run.

Yet these groups are hoping for more traction beyond just a tax overhaul.

"We had three big priorities coming into this year: tax reform, health-care cost relief and regulatory relief. And the only one that we've seen real movement on is regulatory relief. Tax reform is a mixed bag ... and of course, on health-care reform, we've got no relief whatsoever. So there's been some progress, but not as much as we'd hoped for," said Todd McCracken, president and CEO of the nonpartisan National Small Business Association.

Here's where Washington stands on key concerns that will impact Main Street.

Tax cuts

Tax cuts and simplification has long been a key issue among Main Street advocates, who may get some of what they wished for this week with votes slated on the GOP tax reform plan. Republican leaders have signaled they have the votes needed to pass the plan this week.

The bill includes a 20 percent deduction on income up to $315,000, but service businesses structured as pass-throughs, like doctor's offices and law firms that earn more than $315,000, are not qualified. This change expires after 2025. Corporations also see a large drop in their rate, from 35 percent to 21 percent beginning in 2018.

President Donald Trump delivers remarks on tax cuts to the National Association of Manufacturers at the Mandarin Oriental Hotel.

Shawn Thew-Pool | Getty Images

The conservative National Federation of Independent Business initially spoke out against the House version of the bill, claiming it did not do enough to support Main Street, but has come out in support of the Conference Tax Bill, given its changes.

"Tax relief is the No. 1 priority for small businesses, which represent half the economy and half the GDP. This bill will allow millions of small-business owners to keep and reinvest more of their money so they can grow and create jobs. We urge both chambers to pass the bill quickly so it can be signed into law by the end of the year," NFIB President and CEO Juanita Duggan said in a statement.

The NSBA also said it supports the bill, despite ongoing concerns with simplification and true parity among small and large businesses. "It encourages investment, both from individuals and companies in their businesses, and it sort of sets the stage for economic growth over the next few years," McCracken said.

Health-care reform

Attempts to repeal and replace the Affordable Care Act — a key promise from Trump while on the campaign trail — stalled in Congress. While advocacy groups are hopeful that tax reform will come to fruition, there is admitted disappointment in regard to lack of action. Both the NSBA and nonpartisan Small Business & Entrepreneurship Council have expressed hope that once the tax reform hurdle is cleared, the focus will shift to health care.

House Speaker Paul Ryan (R-WI) holds a news conference after Republicans pulled the American Health Care Act bill to repeal and replace the Affordable Care Act act known as Obamacare, prior to a vote at the U.S. Capitol in Washington, March 24, 2017.

Jonathan Ernst | Reuters

"Small-business owners understand that everything takes longer in Washington, but they did have high expectations for President Trump getting more things done at a faster clip," SBE Council President and CEO Karen Kerrigan said. "That is what he said he would do. They are expecting a signed tax reform bill. With the failure of health-care reform, they are now looking at his executive orders on health coverage to bear some fruit."

NAFTA renegotiation

Renegotiating NAFTA has been a key talking point for Trump as both a candidate and as president. He's gone so far as to call the decades-old trade deal one of the "worst ever," adding he may instead go for bilateral agreements with Canada and Mexico if NAFTA is scrapped.

The changes stand to impact companies that import and export with the two countries, which is key, as small businesses can be a powerful force in exporting. In fact, data from the International Trade Association finds that 98 percent of exporting companies were small- and medium-sized businesses in 2015. However, the biggest barrier to trade can be knowledge over how to get started and concerns over payment.

"We are supportive of NAFTA and most trade deals," said Molly Day, vice president of public affairs for the NSBA. "The majority of small- and midsize exporters say they are more likely to enter a new market if it is covered under a free trade agreement with the U.S. Furthermore, just 5 percent report actually being hurt by FTAs."

Minimum wage

With Trump in office and a GOP-controlled Congress, there's little hope for a hike in the federal minimum wage, which has been stagnant at $7.25 an hour since 2009. Some groups, like the NFIB, argue that higher-wage mandates can hurt small business, adding more regulatory burden. But nonetheless, pay is rising around the country.

Fast-food workers and activists demonstrate outside the McDonald's corporate campus in Oak Brook, Illinois,calling for a minimum wage of $15 per hour and offer better working conditions for employees.

Scott Olson | Getty Images News

In 2017, 19 states raised wages based on ballot measures and legislation from previous years, and in 2018, 18 more states will raise their wages, according to Business for a Fair Minimum Wage, an advocacy group in favor of higher pay.

"The business case for raising the minimum wage from boosting consumer demand to reducing turnover to improving customer service, improving product quality and productivity — we see small businesses around the country supporting both enacted and proposed minimum-wage increases," said Alissa Barron-Menza, vice president at Business for a Fair Minimum Wage.